Indices sink as Dalal Street takes cues from Poll Street

The selloff resulted in markets shedding ₹7.5 lakh crore in market capitalisation. Growing chatter on social media and betting trends in the unofficial satta bazaar suggesting that the BJP numbers could be lower than anticipated has made investors nervous.

"There is some profit booking in the market after the voter turnout in the third phase has been lower than expected, which is leading to the uncertainty in some seats where the margin is thin," said Rajesh Palviya, head of technical and derivatives research at . "The market will remain cautious around this in case the trend continues in the fourth phase."

That said the BJP-led NDA coalition is still the favourite to win the election.

Agencies

Midcaps & Smallcaps
The Nifty Mid-cap 100 index dropped 1.7%, the Small-cap 250 index declined 2.7% and the Micro-cap index fell 2.6%.

Out of the 2,704 stocks traded on the NSE, 480 advanced and 2,107 declined on Thursday.

"We have seen a fall in markets due to a general profit booking, as May usually sees a lack of participation," said A Balasubramanian, CEO, . "Indices may also be moving down because expectations around seat wins and have changed, although the market is still sure that the current government will continue its term."

Elsewhere in Asia, markets ended mixed on Thursday. China advanced 0.83% and Hong Kong rose 1.22%. South Korea declined 1.2% and Taiwan dropped 0.68%. The pan-Europe index Stoxx 600 was up 0.2%. Money managers said some might be considering beaten-down over Indian equities.

"China is being looked at more positively, which may lead to more inflows in the country, some at the cost of India," said Andrew Holland, CEO, . " have also seen results in-line and didn't beat expectations, and seeing some concerns, they have also been falling with the broader benchmarks."

Foreign portfolio investors sold shares worth a net Rs 6,994.86 crore on Thursday, taking their sales tally for May so far to over Rs 17,400 crore. They were sellers to the tune of Rs 8,600 crore in April.

On Thursday, domestic institutions were buyers to the tune of Rs 5,642.53 crore.

In the previous five trading sessions, the Nifty has declined 3.66%, while the Sensex has dropped 3.42%.

"The fall has not been major yet, and the market may remain volatile until elections, and the budget, where there are some concerns around capital gains tax," said Holland.

Nifty's Volatility Index or VIX jumped 6.55% to 18.2 on Thursday - the highest closing since October 2022. The index has gained almost 64% in the past month.

"The rise in VIX is not a worry yet until it crosses the 20-25 levels, as the market is experiencing a controlled fall right now. A larger fall may not be expected yet," said Palviya of Axis. "Options premiums have however gone up compared to April."

Technical indicators are pointing to more bearishness in the near term.

"The Nifty has formed a bearish pattern and unless Nifty crosses its resistance zone of 22,200, it will remain bearish, with support at 21,800 levels," said Palviya.